Noront Resources Continues Forward in Ring of Fire

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Students were finding out about career opportunities at the Noront Resources Booth
Students were finding out about career opportunities at the Noront Resources Booth
Noront Resources Board of Directors
Noront Resources Board of Directors

THUNDER BAY – MINING – Noront Resources continue to move forward with their plans in Northern Ontario regarding the Ring of Fire.

Quebec Superior Court has granted an approval and vesting order (the “Order”) for the acquisition by Noront Resources Ltd. (“Noront” or “the Company”) (TSX VENTURE: NOT) of the shares of Cliffs Chromite Ontario Inc. (“CCOI”) and Cliffs Chromite Far North Inc. (“CCFNI”), both indirect wholly owned subsidiaries of Cliffs Natural Resources Inc. (NYSE: CLF) (“Cliffs”) for a purchase price of US$27.5 million. 

On March 23, 2015, Noront entered into a share purchase agreement with certain subsidiaries of Cliffs, including Cliffs Quebec Iron Mining ULC (“CQIM”), pursuant to which the Company would acquire the shares of CCOI and CCFNI. Noront was subsequently advised by Cliffs that it had received an unsolicited, competing bid which it determined, after consultation with its legal and financial advisors and the Monitor, could reasonably be expected to lead to a superior proposal. Following receipt of this proposal, and to ensure maximum value was received for its chromite assets in the Ring of Fire, Cliffs requested that both parties submit revised final binding offers by close of business on April 15, 2015. Noront increased its offer to $27.5 million which was ultimately accepted by Cliffs and the parties entered into an amended share purchase agreement reflecting the revised purchase price.

The transaction closed prior to market opening on April 28, 2015.

“We feel $27.5 million is an attractive price for the acquisition of these strategic assets, which alongside our Eagle’s Nest nickel-copper-platinum group element deposit and our Blackbird chromite deposit will allow us to further our vision of becoming the leading resource company in the Ring of Fire,” said Noront President and CEO Alan Coutts. “Our next step is to have meaningful dialogue with the local First Nations and government regarding the development of these chromite assets which represent a generational opportunity.”

As previously disclosed, completion of this transaction will result in Noront acquiring approximately 103 claims currently owned by CCOI and CCFNI, including: a 100% interest in the Black Thor chromite deposit; a 100% interest in the Black Label chromite deposit; and, a 70% interest in the Big Daddy chromite deposit. It also gives Noront 85% ownership of the McFauld’s Lake copper zinc resource. Noront now holds 360 mining claims and roughly 65% (80,000 hectares) of the emerging mining camp known as the Ring of Fire, located 500 kilometres northeast of Thunder Bay. 

Transaction Details
To finance the transaction, concurrently with the execution of the revised share purchase agreement, Noront entered into an amended and restated loan agreement (the “Loan Agreement”) with Franco-Nevada through which Franco-Nevada will loan US$25 million to Noront for a five-year period at a 7% interest rate with interest to be accrued and paid at the end of the loan term. In return, Franco-Nevada will receive a 3% royalty over the Black Thor chromite deposit and a 2% royalty over all of Noront’s property in the region with the exception of Eagle’s Nest, which is excluded. The Loan will be secured against the CCOI and CCFNI assets acquired in connection with the Transaction. In addition, Noront will receive from Franco-Nevada US$3.5 million in cash consideration as part of the granting of the royalty over the existing Noront property. The Loan proceeds and a portion of the royalty payment were used to fund the acquisition price of the Transaction.

Noront engaged Scotia Capital Inc. as its financial advisor in connection with the loan and royalty transactions.

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